Signs of life

Gold opened the week and the month of September up $9.60, finally breaking the 15-month downtrend line from its May 2006 high.

On both the weekly and daily charts, price is above both the 50- and 200-period moving averages, which are themselves rising. RSI is above 50 and rising; MACD and its histogram have both crossed over to the upside. All these are signs of strength.

Another is the fact that support at the 200-day MA on the daily chart was tested successfully three times before the breakout from the long triangular consolidation.

Gold could now go straight up to test the May 2006 high at about $730. More likely, however, would be a backtest to the downtrend line, which would now provide support for the yellow metal in its climb.

Silver, meanwhile, has turned up on the weekly chart but faces considerable overhead resistance.

Price is stuck between the rising 50- and 200-week MAs, and while the MACD histogram is showing a weak positive divergence, MACD itself is below zero and RSI remains below 50.

On the daily, MACD and its histogram have crossed to the upside, and RSI has broken above 50, both signs of strength. However, price remains below both the 50- and 200-day MAs, which are falling.

If silver stays weak, a sustainable uptrend in gold seems unlikely.

GDX, the gold-miners ETF, has bounced back from what appears to have been a capitulative high-volume day on Aug. 16 to face resistance at its 50-week and 50-day MAs, around $39.

On the weekly, while price is above the rising 200-week MA, and the MACD histogram has turned upward, MACD itself is below zero, and RSI has yet to rise above 50.

On the daily, while MACD and its histogram have crossed to the upside, and RSI is now above 50, the 50-day MA remains below the 200-day and both are falling.

It appears that GDX -- which, like the similarly composed HUI index of unhedged gold miners, is seen as a leading indicator for the gold price -- has work to do.